Insurance companies typically provide their customers with health identification (ID) cards, which contain information such as patient name, employer plan number, type of insurance coverage, and applicable co-pay amounts. These ID cards are useful to healthcare providers such as doctors.
While ID cards are useful, they do not convey information regarding the current status of insurance coverage. For example, the cardholder may no longer be employed by the company that originally provided insurance coverage, so that the cardholder's insurance coverage may no longer be valid. To deal with this issue, healthcare providers use different means to check the current eligibility status of patients.
Some providers fax and/or make telephone calls to a customer service center operated by the cardholder's insurance carrier to determine if the cardholder is eligible for a particular type of healthcare service. Such methods, however, can be time consuming for the provider's office staff and are expensive for insurance carriers.
Some companies (e.g., SpotCheck and ProxyMed) have developed electronic eligibility verification systems using point-of-sale (POS) terminals. The POS terminals require either a dedicated POS terminal or separate connections to the eligibility service provider. Such systems require the use of specialized POS terminals and specialized connections between the service provider and the carrier. Since specialized equipment is required, widespread acceptance of such systems has not been achieved.
Some companies (e.g., United Health Group and MasterCard) have developed electronic eligibility verification using a POS terminal and a payment authorization transaction over an existing payment network, where the transaction amount is used to equate to a particular service type (e.g., $0.01 is an office visit). This approach has created problems for the provider's office and the provider's financial institution, because these transactions are indistinguishable from a true payment transaction and can be inadvertently processed as real payment transactions.
Some healthcare clearing houses (e.g.; WebMD) and insurance companies have developed Internet-based systems to permit provider offices to access eligibility information electronically, but this typically requires relatively expensive PC equipment and PC-trained office staff. As noted above, if specialized equipment is required, widespread acceptance is unlikely.
Moreover, the flow of payments and information between healthcare providers and insurance carriers has traditionally been inefficient and substantially error-prone because of structural and other factors, and many opportunities exist for optimization. Another challenge lies in latency of the patient payment collection process. Providers typically do not bill patients until submitted claims have been processed and adjudicated by the patient's insurance carrier—a process which may take several weeks to complete. As a result, an average of 42% of total provider revenue may be tied-up in accounts receivables, of which a significant share may exceed one hundred and twenty (120) days. This is expected to exacerbate over the next few years with the drive toward consumer driven health plans.
The patient collection process may be conducted electronically; however, industry standards may confine both the format and the content of electronic transmissions containing healthcare related information. The United States' Health Insurance Portability and Accountability Act (HIPAA) is an example of a standard in the industry that may govern the form of electronic transmissions dealing with health care information. The primary goal of HIPAA is to simplify and enhance electronic data interchange (EDI) between providers and insurance carriers, and thereby drive efficiencies in their overall dialogue. To protect the privacy rights of patients, HIPAA also defines rules to ensure that all medical records, medical billing, and patient accounts meet certain consistent standards with regard to documentation, handling and privacy. Any healthcare provider that electronically stores, processes or transmits medical records is required to be fully HIPAA compliant as of April 2006.
It would be useful to develop solutions that can facilitate an electronic dialogue between healthcare providers and insurance carriers based on HIPAA standards. It would also be useful if the solutions take into consideration scalability and interoperability.
Scalability Considerations
Insurance carriers and healthcare providers differ fundamentally in levels of consolidation.                There are ˜800,000 physicians in the USA, most of which work in small practice groups (less than 4 MDs), and ˜5,800 registered hospitals.        Although the number of insurance carriers approximate 20,000, the top 20 cover 70% of all U.S. enrollees.Collectively, these entities account for an estimated 2 billion eligibility transactions and 900 million claims transactions each year.        